A Summer of Concerts in a Year of Moderating Inflation

It is no secret that my wife and I are fans of live music. There are several artists that we have seen multiple times over the past decade and a half, with some taking us to small venues in small towns, and others bringing us to a certain college football stadium outside of South Bend, Indiana. We have always been drawn to the experience that listening to one's favorite artist with thousands of your friends can bring. So, it is no surprise that we already have eight concerts scheduled for the next several months, with others on the wish list.

Demand for live experiences, whether in the arts, sports, or music have been in high demand in our post-pandemic stupor. Each professional sports league reporting attendance growth over the past two seasons, and Live Nation reporting that concert attendance has increased by 24 percent in the past year.

Even the most casual observer of the news that has also become a budding economist will conclude that increasing prices follow increasing demand.

Rachel Wolfe reported on the correlation between concert prices and inflation in a piece in the April 20th Wall Street Journal, noting the following:

• The average resale price for a concert ticket on SeatGeek has more than doubled in nominal terms since 2019, from $125 to $252, and by 69 percent in real terms,
• The average ticket price for the Top 200 tours on Ticketmaster increased from $87 in 2019 to $104 in 2022. This is virtually unchanged in real terms.
• Separately, Pollstar has reported that the average ticket price for the Top 100 tours increased from $28 in 1995 to $80 in 2019, or 70 percent in real terms.

The article, as well as several others published recently then discuss the extent to which music fans will go to see their favorite artists, whether through freelance food delivery, making other entertainment sacrifices, or with creative travel itineraries. While this makes for interesting reading, these anecdotes help to bury the headline - namely that concert prices increased by far more before the pandemic than after.

There are several possible explanations for this, beginning with the growth of Live Nation's control of major venues and fee structures. Congress investigated this earlier this year in the wake of Ticketmaster's handling of the Taylor Swift Eras Tour.

• The TL:DR is that Live Nation has drastically reduced venue availability and artist revenue in most instances while increasing service and facilities fees by an average of three percent annually in real terms since 2000. Artist revenue has conversely decreased by eight percent on a per appearance basis.

The growth of secondary markets such as SeatGeek and StubHub have largely moderated secondary prices by removing inventory from ticket brokerages and expanding inventory for most events.

• Venues and artists have responded by expanding the share of tickets offered through partnered pre-sales and by implementing dynamic pricing.
• Dynamic pricing models can cause ticket prices to fluctuate by as much as 50 to 60 percent between the on-sale date and event date.

Finally, the total number of venues hosting live music has decreased for a variety of reasons including the COVID-19 pandemic. Similarly, venue capacity had been decreasing before the pandemic, with the public health concerns raised accelerating downsizing.

• The SBA's Shuttered Venue Operators Grant Program (previously known as the Save Our Stages Act and championed by the National Independent Venue Association) was included in the American Rescue and Recovery Plan of 2021 and has helped, though the National Endowment for the Arts estimated that as many as 20 percent of all venues nationally may have closed.

This is another example of why context and history matters significantly when analyzing economic trends. It also highlights the market dynamics beyond cost that have impacted pricing. We should of course expect that concert prices will continue to increase as venues, promoters, and artists see opportunities and a society that increasingly values experience as influence flocks to arenas and stadiums.

As for me, I will be happy to celebrate my own summer of concerts by seeing 8x the music for 1/4 of the entry price for Ms. Swift. That being said, it would be interesting to see what a tour with a $100 million production budget looks like. That is a far cry from the bars, craft breweries, and small venues that I tend to favor.